Home Sales Continue To Soar In September

Despite the troubling economy one thing that continues to flourish is home sales. Home sales soared in the month of September by the largest amount in more than 26 years and the tax credit for first-time owners certainly played a part.

The month of September showed tremendous results with a jump of 9.4 percent bringing home sales up nearly 24 percent since January. The problem is we may be nearing the end in rise of home sales if Congress decides to not extend the credit of up to $8,000 for first-time buyers. As of right now that deadline is set for November 30.

What the market is finding is many people are jumping the gun on finding a house prior to the deadline just in case it is not extended. After all, $8,000 is a huge savings on a first home. This is what has contributed to a nationwide sales rise of 5.57 million last month. This was by far the strongest month that could have been predicted.

Home sales are not the only positive in the real estate market as the inventory of unsold homes fell nearly 8 percent to 3.6 million. This number is less than an eight-month supply considering the way homes are being sold today.

Las Vegas and Southern California are seeing incredible competition for low-priced foreclosures. Real estate agents are finding multiple offers on homes before a single one is finally accepted. The more aggressive the better nowadays.

Between the tax credit and the low-priced foreclosures or short sales, the market is booming in this area. It is not out of the ordinary right now for an agent to write five different offers for a single buyer on different properties to ensure they get one of them.

With all of this said, unfortunately economist’s fear we are not out of the woods quite yet with the real estate market. There is no question that home sales and housing construction has raised. However, it is believed that prices will resume their descent. The sales price last month was down an incredible 9 percent from last year and is even lower than the median in August at just $174,900.

Unemployment and foreclosures are the primary reasons for the low prices. Unemployment is at 9.8 percent and is expected to jump to 10.5 by next year. What’s worse is that 3 million households are currently three months behind on payments or are in foreclosure.

A dilemma many are facing is buying a home and then potentially losing their job. Few can sit back and confidently say they will have a job a year from now. For this reason, some are hesitant to make an offer on a home with the fear they may lose their job because of the economy.

There has been talk about extending the tax credit through June 30 as well as including all home buyers. This would deliver a blow of an estimated $16.7 billion. As expected, realtors and homebuilders are in favor saying the tax credit is what is getting the housing market back in the right direction.

Despite this, some analysts believe the tax credit is now as crucial as it may seem on the housing market. One problem that can arise from a tax credit extension is that some of the 1.5 million applications for the tax credit are fraudulent. There have been questions on the legitimacy of some 100,000 claims for the credit including illegal immigrants and 580 people under 18.

As sales continue to rise, the next couple of months will say a lot about what direction the real estate market will head depending on whether there is a tax credit extension or not.